The Dallas telecommunications giant said today it has agreed to buy Nextwave Wireless, a company that holds two bands of spectrum. AT&T will pay $25 million for the company, as well as an additional contingent payment of $25 million and the assumption of debt for a total cost of $600 million.

The Nextwave acquisition is just the latest attempt by AT&T to augment its spectrum, which would allow it to eventually use those airwaves to improve the capacity and quality of its cellular service. The rise in wireless use has many of the carriers facing a looming spectrum crunch, forcing them to go after spectrum through acquisitions or auctions.

AT&T most notably attempted to acquire T-Mobile USA in a blockbuster deal last year to greatly enhance its spectrum position, but the acquisition was scuttled by regulators who feared too great a concentration of power. Regulators are currently reviewing Verizon's deal to buy spectrum from several cable providers.

Since the failed takeover, AT&T said it would seek spectrum through a number of smaller acquisitions, and the company has been in an acquisitive mood.

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Nextwave, meanwhile, is a fairly obscure company in the wireless industry, best known for previously having its spectrum assets seized by the U.S. government while it was in bankruptcy protection. The company later acquired more spectrum after re-emerging from bankruptcy.

The company owns two types of spectrum licenses, one in the Advanced Wireless Services band and another in the Wireless Communications Services band. The WCS band couldn't previously be used for cellular service because of concerns that it would interfere with adjoining satellite radio bands, but AT&T and Sirius XM have jointly filed a proposal with the Federal Communications Commission to use the airwaves while protecting them from interfering with satellite radio. If approved, AT&T could use the spectrum in three years.

AT&T has some compatible spectrum in the AWS band, although some of it was given to T-Mobile as part of a breakup fee when that deal fell apart.

The Nextwave acquisition still needs to be approved by regulators, and AT&T believes it will close by the end of the year.

Corrected at 6:55 a.m. PT: This story originally said in error that AT&T would assume $600 million in debt. The total cost of the deal, including the debt and payments, is $600 million.

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Roger Cheng is the executive editor in charge of breaking news for CNET News. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade. He's a devoted Trojan alum and Los Angeles Lakers fan.
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